Deloitte to Defend Executives Caught Up in Parmalat Scandal

by AccountingWeb on Mar 3 2004printer friendly

With Grant Thornton’s American branch severing ties with its Italian affiliate in the wake of the Parmalat scandal, Deloitte Touche Tohmatsu is taking the opposite approach, saying yesterday it will "vigorously defend" two of its partners facing charges in the case.

Deloitte took over auditing duties of the now defunct dairy giant from Grant Thornton in 1999 and remained the company’s auditor until the company declared bankruptcy late last year. Prosecutors are looking into fraud within the company amounting to $8.04 billion.

Deloitte partners Adolfo Mamoli and Giuseppe Rovelli have denied prosecutors’ charges that they improperly influenced Parmalat’s stock price, obstructed the work of the Italian markets regulator or were associated with false communications between people connected to the case, the firm said and the Wall Street Journal reported.

The two declined to be interviewed by prosecutors, with Deloitte saying they had been given no access to thousands of documents that could possible be used against them.

Deloitte, which is not facing charges in the case, has chosen to defend its employees while former Parmalat auditor Grant Thornton has chosen to stay out of the case facing the chairman of Grant Thornton's Italian office, Lorenzo Penca, and Maurizio Bianchi, a partner.

The two were arrested Dec. 31 on charges they helped contribute to the alleged fraud at Parmalat, the Journal reported. The Journal said that former Parmalat officials have implicated Grant Thornton in helping the company to hide numerous false transactions that were designed to cover up hundreds of millions of euros in losses, according to people familiar with the testimony of these now-jailed executives.